Correlation Between Pace International and Pace Global
Can any of the company-specific risk be diversified away by investing in both Pace International and Pace Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pace International and Pace Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace International Equity and Pace Global Real, you can compare the effects of market volatilities on Pace International and Pace Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pace International with a short position of Pace Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and Pace Global.
Diversification Opportunities for Pace International and Pace Global
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Pace is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Equity and Pace Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Global Real and Pace International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pace International Equity are associated (or correlated) with Pace Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Global Real has no effect on the direction of Pace International i.e., Pace International and Pace Global go up and down completely randomly.
Pair Corralation between Pace International and Pace Global
Assuming the 90 days horizon Pace International Equity is expected to under-perform the Pace Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pace International Equity is 1.36 times less risky than Pace Global. The mutual fund trades about -0.26 of its potential returns per unit of risk. The Pace Global Real is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 716.00 in Pace Global Real on August 28, 2024 and sell it today you would lose (4.00) from holding Pace Global Real or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace International Equity vs. Pace Global Real
Performance |
| Timeline |
| Pace International Equity |
| Pace Global Real |
Pace International and Pace Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace International and Pace Global
The main advantage of trading using opposite Pace International and Pace Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International position performs unexpectedly, Pace Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pace Global will offset losses from the drop in Pace Global's long position.| Pace International vs. Pace Large Value | Pace International vs. Pace Large Growth | Pace International vs. Ubs Allocation Fund | Pace International vs. Pace International Emerging |
| Pace Global vs. Dodge Global Stock | Pace Global vs. Morgan Stanley Global | Pace Global vs. Us Global Investors | Pace Global vs. Ab Global Bond |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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